3 Collier Bankruptcy Practice Guide P 66.09


Summary

  • [1] Setoff Under Nonbankruptcy Law; Potential Conflicts with the Rights of Others

    A creditor giving consideration to effecting a prepetition setoff must initially determine that such setoff is permissible under the applicable nonbankruptcy law1Link to the text of the note and must consider whether the exercise of such right conflicts with the rights of any other creditor of the debtor. The obligations that the creditor intends to set off must be valid and enforceable.2Link to the text of the note In addition, applicable law may require that either or both of the obligations to be set off not be contingent, unliquidated or unmatured. Accordingly, obligations and notes maturing in ...